The global financial institution decided to use the cryptocurrency technology due to its capabilities to simplify capital raising and trading.

The World Bank has signed a deal with Commonwealth Bank of Australia (CBA) to arrange the issuing of its first blockchain-based bond, the global financial institution said in a press release on Thursday. The World Bank chose the cryptocurrency technology as a new way of achieving its mission to fight economic inequality and poverty around the world.

According to the press-release, the bond will be the first in the world to be created, allocated, transferred and managed with blockchain technology. Dubbed ‘bond-i’, the instrument will be based on the A$ Kangaroo bond, which is the Australian financial instrument for foreign-based entities that aim to issue debt in Australian dollars but want the funding to be in foreign currency, not in AUD.

The World Bank, which has been issuing bonds since 1947, currently allocates around $50-$60 million in debt instruments to help sustainable development projects in various countries.

“Blockchain has the potential to streamline processes among numerous debt capital market intermediaries and agents. This can help simplify raising capital and trading securities; improve operational efficiencies; and enhance regulatory oversight,” the World Bank explained in the statement.

Developed as a distributed ledger technology (DLT), blockchain has various functions that make it attractive to financial institutions: it can reduce cost, speed up transactions and bring more accountability by tracking all changes made to the network.

Neither the World Bank nor the CBA disclosed additional information about the size of the new blockchain-based bond or the releasing date. The instrument will be issued simultaneously at World Bank office in Washington and CBA headquarters in Sydney after consultations with possible investors. The operation in the US capital will use Microsoft Azure cloud system.

Sophie Gilder, Head of Blockchain, Innovation Labs, CBA said:

“We know blockchain has the potential to revolutionize financial services and markets, and this transaction is a significant step towards that future state. By working collaboratively with the World Bank, we were able to find solutions to technical and legal considerations to make this […]transaction a reality.”

CBA is not a newcomer to cryptocurrency technology. Last month, the lender tested Ethereum-based blockchain supply chain.